Public call for developing a system When selling options one gets a credit upfront. The credit is the premium of the option. But one can not say that the credit one got is a secure thing yet. A secure thing it will be only after the expiration of the option if the counterparty's buy option expires worthless. Now, the interesting point is how to secure or hedge the credit to always keep it fully or nearly fully regardless how the market moves. Can there be such a system or hedging mechanism exist? I think there should be a method available. Let's collectively find a method or system to always earn the credit. Let's take selling Call options for example.
When I tried dynamic delta hedging with selling Call options I got these (unsatisfactory) results: 1) One makes a profit only if Sx < S0. Sx = S0 means break-even. 2) The profit is even linear: the maximum is at Sx <= K; then it is the full credit. 3) If Sx > S0 then one makes a loss. 4) Volatility changes seem to have zero effect on the result. (S0=initial spot, Sx=spot at expiration, K=strike) There ought to be a much better method than this I hope...
The only thing stupid is IMO your such reply. Are you also able to articulate what you find stupid in this?
yes, but I have no plans in writing this down here, it would take a few pages ... buy a book on options at amazon.de and read it ...
I doubt any book is able to answer this question, because otherwise it would mean holy grail. My suggestion to you: just don't participate in threads you are not willing to contribute something positive, because your such replies are only destructive without any value for the thread.
ha, you are so stupid it's beyond believe ... I will as of now stop following your threads ... heaven knows I put in a lot of effort to explain things to you ..